Annual Report 2013

Forecast

Outlook for the Henkel Group 2014

We expect the Henkel Group to generate organic sales growthorganic sales growth
Growth in revenues after adjusting for effects arising from acquisitions, divestments and foreign exchange differences – i.e. “top line” growth generated from within.
of 3 to 5 percent in fiscal 2014.Our expectation is that each business unit generates organic sales growthorganic sales growth
Growth in revenues after adjusting for effects arising from acquisitions, divestments and foreign exchange differences – i.e. “top line” growth generated from within.
within this range.

In line with our 2016 strategy, we furthermore expect a slight increase in the share of sales from our emerging markets.

The starting point for our expected organic sales growthorganic sales growth
Growth in revenues after adjusting for effects arising from acquisitions, divestments and foreign exchange differences – i.e. “top line” growth generated from within.
is our strong competitive position. We have consolidated and further developed this in recent years through our innovative strength, strong brands, leading market positions as well as the quality of our portfolio.

In recent years we have introduced a number of measures that have had a positive effect on our cost structure. Also in this year, we intend to continue adapting our structures to constantly changing market conditions and to continue our strict cost discipline. Through optimization and standardization of processes and continued expansion of our shared services, we can pool activities and thus further improve our efficiency while simultaneously enhancing the quality of our customer service. Moreover, the optimization of our production and logistics networks will contribute to improving our cost structures.

These factors, together with the expected increase in sales, will have a positive effect on our earnings performance. Compared to the 2013 figures, we expect our adjusted return on sales (EBIT)return on sales (EBIT)
Operating business metric derived from the ratio of EBIT to revenues. Also known as EBIT margin.
to increase to around 15.5 percent, and that all business units will contribute to this improvement. We expect an increase in adjusted earnings per preferred share in the high single digits.

Furthermore, we have the following expectations for 2014:

  • Moderate increase in the prices for raw materials, packaging, and purchased goods and services
  • Restructuring charges at the level of the previous year
  • Investments in property, plant and equipment and intangible assets between 500 and 550 million euros

Dividends

Subject to the approval of the Supervisory Board and the Shareholders' Committee, future dividend payouts of Henkel AG & Co. KGaAKGaA
Abbreviation for “Kommanditgesellschaft auf Aktien.” A KGaA is a company with a legal identity (legal entity) in which at least one partner has unlimited liability with respect to the company’s creditors (personally liable partner), while the liability for such debts of the other partners participating in the share-based capital stock is limited to their share capital (limited shareholders).
shall, depending on the company's asset and profit positions, as well as its financial requirements, amount to 25 percent to 35 percent of net income after non-controlling interestsnon-controlling interests
Proportion of equity attributable to third parties in subsidiaries included within the scope of consolidation. Previously termed “minority interests.” Valued on a proportional net asset basis. A pro-rata portion of the net earnings of a corporation is due to shareholders owning non-controlling interests.
, and adjusted for exceptional items.

Capital expenditures

We are planning to increase our investments in property, plant and equipment and intangible assets to approximately 500 to 550 million euros in fiscal 2014. We will allocate the largest share of our budget to expanding our business in emerging markets.

Considerable investments are planned in the Laundry & Home Care and Beauty Care business units for optimizing and expanding production in the Eastern Europe and Africa/Middle East regions. In the Adhesive Technologies business unit, the focus in 2014 will be on further expanding our production capacity in the emerging markets of Asia and Eastern Europe. In addition, investments in IT infrastructure will contribute substantially to optimizing our processes.